African Economies Show High Potential for Digital Asset Adoption
Date: 2024-09-23 Author: Oliver Abernathy Categories: IN WORLD
A number of emerging economies in Africa have the potential to become digital asset hubs. At the same time, compliance costs for cryptocurrency exchanges are increasing as regulatory clarity emerges, according to Ben Caselin, chief marketing officer at VALR, a crypto exchange based in Johannesburg, South Africa.
“South Africa is a gateway to the rest of Africa, it has a good legal system and an independent judiciary. It’s easy to set up a company in South Africa,” Caselin told Cointelegraph in an exclusive interview.
Caselin sees several emerging economies on the African subcontinent as promising hubs for digital asset adoption.
In April, the Financial Sector Conduct Authority of South Africa (FSCA) issued new crypto asset service provider (CASP) licenses to VALR. The exchange, which has raised $55 million in equity capital from Pantera Capital, Coinbase Ventures, and others, received Category I and II licenses from the FSCA.
According to a report by Statista, South Africa’s cryptocurrency market is expected to reach $246 million in revenue in 2024, with a projected compound annual growth rate of 7.86% to reach $332.9 million by 2028.
Cryptocurrency regulation in South Africa is gaining momentum
On March 12, the Financial Sector Conduct Authority of South Africa approved 59 licenses for cryptocurrency platforms under the existing legislation. At the time, 262 applications were still being processed out of a total of 355 applicants.
South Africa became the first African country to license cryptocurrency exchanges. In 2021, the country began developing a separate regulatory framework for cryptocurrencies, with the regulations scheduled to be completed by 2022.
Kaselin noted that after many years of consultation and close engagement with the regulator and other local market participants, the FSCA has only recently established its regulation for crypto asset service providers, requiring on-site inspections to ensure compliance.
Kaselin expects this framework to continue to evolve over the next few years. He stressed the importance of gaining greater clarity around capital controls and crypto assets, adding that “more clarity on definitions” can be expected in the future.
The regulation has also impacted compliance costs, which have “increased significantly” for VALR. Kaselin said that VALR has significantly increased its headcount in the past few months, with more than 10% of its staff working in compliance.
